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    dbvalley's Avatar
    dbvalley Posts: 1, Reputation: 1
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    #1

    Aug 14, 2016, 04:38 PM
    Inheritance Tax Questions
    My Son will inherit our paid off home in the future. He will live in the house with his family for 5 years or more and at some point he may decide to sell it. Would the sale be treated as a regular capital gains?
    ma0641's Avatar
    ma0641 Posts: 15,675, Reputation: 1012
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    #2

    Aug 14, 2016, 05:27 PM
    No. When he inherits the house, that is his basis cost, the value on that day. If he lives in the house 2 of the next 5 years, can deduct $500,000 of the gain and will be taxed on gain OVER that amount.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #3

    Aug 14, 2016, 07:03 PM
    What ma0641 says is correct, provided your son is MARRIED when he sells the house.
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #4

    Aug 15, 2016, 04:12 AM
    And a formal appraisal needs to be done at time of inheritance.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #5

    Aug 15, 2016, 05:31 AM
    Formal appraisal is probably not a bad idea, but normally a comparative value analysis from a real estate agency is considered adequate to determine FMV,
    ma0641's Avatar
    ma0641 Posts: 15,675, Reputation: 1012
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    #6

    Aug 15, 2016, 06:02 PM
    Quote Originally Posted by AtlantaTaxExpert View Post
    What ma0641 says is correct, provided your son is MARRIED when he sells the house.
    I noticed it said "with his family" so that's why I said $500K not 250. Thanks for insight.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #7

    Aug 15, 2016, 09:04 PM
    So he did, making your $500K assumption valid.
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #8

    Aug 16, 2016, 04:45 AM
    Here in CT, we were told we had to have a formal appraisal.
    (CT is famous for horrible probate laws.)
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #9

    Aug 16, 2016, 07:24 AM
    Noted with interest!
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #10

    Aug 16, 2016, 03:55 PM
    While that's true about CT, I may be wrong about probate requiring a formal appraisal. My mother's half was in a trust. Might have been the bank.
    ma0641's Avatar
    ma0641 Posts: 15,675, Reputation: 1012
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    #11

    Aug 16, 2016, 06:59 PM
    Quote Originally Posted by joypulv View Post
    While that's true about CT, I may be wrong about probate requiring a formal appraisal. My mother's half was in a trust. Might have been the bank.
    When my mom died, I was executor. Sold the house (NJ), gave my sister half of proceeds, filed Income Taxes for mom ( NJ follows Federal exclusion) and the buyer has fair market value. No appraisal except buy buyers mortgage company. Some states are known inheritance tax pits.

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